The depth of the crisis swirling around John Prescott - a man described by Tony Blair as 'vital' to his government - was clear in Downing Street from the moment Prescott's former lover went tearfully on television shortly before 10pm last night.

Claiming she'd been abandoned, betrayed and lied about, Prescott's diary secretary, Tracey Temple, said she felt she had no choice but to 'tell my side of the story.' By midnight, that story - a chronicle, in lurid detail, of repeated sexual relations in Prescott's office and official residences, including an encounter just minutes after the Iraq war memorial service at St Paul's - was on newsstands around the country.

And both Downing Street and Prescott's top aides were hurriedly consulting on how - and whether - they could limit the damage. The decision on the immediate response was vintage Prescott. Livid, a close aide said, over what he termed an 'unsubstantiated' account for which a Sunday paper had paid a reported £250,000, the DPM was determined to come out fighting.

The stakes, personal and political, were enormous. Prescott, according to close cabinet colleagues, was desperate to try to salvage his relationship with his wife of 44 years, Pauline. But if that meant giving up the DPM's job, he would leave a huge political void. Prescott, the cabinet sources said, is the only top government figure sufficiently trusted by the Prime Minister and Chancellor Gordon Brown to ensure the promised 'orderly transition' when Blair leaves Number 10.

Prescott's departure would be seen as particularly damaging at a time when the Home Secretary, Charles Clarke, still faces mounting pressure over the release of hundreds of foreign criminals who should have been considered for deportation. Underlining the precariousness of Clarke's position, Blair is quoted in today's News of the World as not ruling out having to sack the Home Secretary if one of the former prisoners turns out to have committed further serious crimes.

But the Downing Street focus last night was on Tracey Temple's graphic allegations of Prescott's 'abuse of power for sexual gratification', published by the Mail on Sunday in a deal negotiated by the publicist Max Clifford.

Temple claimed the Deputy Prime Minister had initiated their physical relationship, suddenly 'cupping my face in his hands' when she delivered ministerial boxes to his flat at Admiralty House in central London in May 2002. In a subsequent two-year affair, she said they had sexual relations both there and in his office. 'We were lucky we were never caught,' the newspaper account says, 'as we never shut the door.'

In a further allegation likely to fuel Opposition accusations that the affair with Temple was not merely the private matter Downing Street has insisted, Temple alleged that they had sex 'in the office a couple of times. He would usually be going through his ministerial box - maybe things to do with regeneration, or the environment.'

Among other allegations spread over nine pages, the newspaper account said she moved into a London flat with Prescott's top press aide, Alan Schofield, in order to be able to continue the relationship, and how she once had sex with Prescott in a Southampton hotel as Pauline waited to meet him for dinner downstairs. The Mail on Sunday also carried allegations of another Prescott affair, with a Labour Parliamentary candidate, 20 years ago.

Temple said she believed that the news of her affair with Prescott, which broke in the Mirror last Tuesday, came as a result of a political rival of the DPM telling her current boyfriend of the relationship. She said that the first she had known about the impending story was a note from her boyfriend the day before saying 'you slept with the DPM' and subsequent call from Prescott's press officer warning her the news was about to break.

'Trace, I'm trying to help you,' she quoted him as saying. But she said she later concluded 'he just wanted all the information I had' and said that she felt betrayed, used and abandoned.

Temple insisted that she still liked and respected Pauline: 'I never wanted to hurt her and I never wanted to break up the marriage,' she said.

But she also said that she didn't regret her affair with Prescott. 'He was a great boss and I enjoyed the attention he gave me,' she said. 'But I wasn't into the whole power thing. It wasn't like I went home thinking, "Oh my God, I'm sleeping with the Deputy Prime Minister". I don't think I was looking for a father figure either.' She added: 'I think I liked the attention and feeling cared for.'

She added that while living in Schofield's flat, she had been careful to keep the affair with Prescott secret from friends. 'I never brought anybody home, except a close girlfriend - the only person I confided in about the affair,' she said. 'When I told her she was like - "Bloody hell, Trace, what have you done?" But I kept it a big secret. I never even told my mother.'

In a further political twist to the affair, Temple also revealed that before embarking on the relationship with Prescott, she had been offered a job working for Baroness Sally Morgan, then one of the Prime Minister's most trusted Downing Street advisers.

Downing Street was last night standing by Prescott, saying that Blair continued to have confidence in the DPM. Only two days ago, the Prime Minister described Prescott as essential to his government, saying he was particularly valuable in behind-the-scenes political roles.

But in a sign that the allegations by Temple could hugely increase pressure on the Deputy Prime Minister, Prescott's own sister was quoted last night as saying he had been a 'stupid bugger' to enter into the relationship.

'John was a very powerful man and he's lost a lot of credibility,' Vivienne Williams, 63, was quoted as saying.

But she told the Mail on Sunday that she had been in touch with both him and Pauline hours before Temple's account was published. 'She is very mad. But they will definitely stay together. Pauline said that to me this morning.

'John is a very lucky man to have Pauline and I think he is beginning to realise that,' Williams said. 'Pauline will cope. She will kick him about, but I don't think she will let him off easily. He's been a stupid bugger. He rose to the top, and now he's fallen right down.'

Downing Street's determination to voice support for Prescott, senior Cabinet sources suggested, was partly due to concern about the political effects should he be forced to resign. Without Prescott's role as Blair-Brown peacemaker, top allies of the Prime Minister fear a surge in backbench pressure for him to name an early date for handing over power to the Chancellor. Their concern has been deepened by internal predictions that Labour could do very badly in next week's local elections.

But Temple's allegations that the sexual relationship took place alongside Prescott's official duties were seen as likely to lead to increased calls from the Tories, the Liberal Democrats and even possibly some Labour backbenchers for him to step down. Opposition MPs have already called for an inquiry into whether the Deputy Prime Minister's relationship with Temple constituted an abuse of his political position.

What they said

"Trace, I'm trying to help you. You must be completely honest with me and tell me everything"

Office of the Deputy Prime Minister official's advice to Tracey

"They have abandoned me and hung me out to dry. I have been left completely alone"

Tracey describing her treatment by the government after news of the affair became public